But it’s in an industry with more challenges than some others — health care. And California has some additional regulations, Murphy said.

The state’s Medi-Cal reimbursements are at or near the lowest in the country, and hospitals aren’t allowed to hire doctors directly, putting a layer between the employer-employee relationship, Murphy said. Nationally, Medicare reimbursements have been cut the past two and a half years in preparation for the Affordable Care Act, squeezing the hospital’s ability to hire and expand.

“We have to plan very appropriately, given the resources that we have,” Murphy said. “We’re a little more cautious and conservative because of all of the unknowns. In the past, there were less unknowns and more certainty. Those unknowns cause any prudent individual running an organization of this size — or any size — to be careful.”

In theory, the hospital would get some of the currently reduced Medicare reimbursements back through insurance payments should the Affordable Care Act work as it is intended and more people get coverage, Murphy said.

The hospital must also compete for employees and for patients with other providers, including Scripps, Kaiser and UC San Diego, each among the county’s largest employers.

Overall challenge

Murphy said with the Affordable Care Act, and the costs of health care, the industry must find a way to operate in a more efficient and cost-effective way.

On attracting doctors

In California, hospitals, with the exception of universities, are not allowed to hire doctors. California is one of eight states that has this requirement, according to an Internal Revenue Service report. Instead, they must contract with medical groups that doctors join. Murphy said from a business perspective that practice hinders direct relationships. The state requires this system to keep corporate interests out of doctors’ decision-making.

On expansion

Murphy said Sharp is looking at expanding in the South Bay, where there may be an undersupply of beds. But he said the hospital has no plans to expand outside of San Diego County. In 1998, Sharp sold its hospital in Murrieta to Tenet Health Care and is no longer in Riverside County.

Sharp has recently built new facilities, including a Cancer Center and expanded emergency department at Sharp Chula Vista, and medical office buildings in Sorrento Mesa and downtown. This year, Sharp will open a new office building in Del Mar and a renovated Motion Center (physical therapy and fitness) at Coronado Hospital.